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Based in Sunnyvale, California, ArthroCare Corporation is a medical device company, relying mostly on its patented Coblation technology.

Coblation-based products use radiofrequency energy to dissolve soft tissue without burning, unlike other radiofrequency-based products, like lasers, that are heat-driven.

ArthroCare organizes its business around four medical specialties. The ArthroCare Sports Medicine unit is devoted to products used in arthroscopic joint surgery, the company’s first application for Coblation. It has found a ready market among surgeons using single-use ArthroWands repairing the knees and shoulders of athletes.


The ArthroCare ENT business unit leverages Coblation technology to perform tonsillectomies as well as procedures to address disorders such as chronic stuffy noses and problem snoring. The unit also represents the company’s cosmetic surgery product line, which offers a wrinkle-reducing procedure that rivals laser techniques. Finally, the Coblation business unit looks to develop new devices for laparoscopic and general surgical procedures.

In addition to Sunnyvale, the company also maintains a campus in Austin, Texas, a manufacturing plant in Costa Rica, and an international office in Stockholm, Sweden.

ArthroCare was founded in by Hira V. Thapliyal and Philip E. Before teaming up with Eggers, Thapliyal gained experience in the medical device field while working for Vascular Interventions, maker of atherectomy systems.

In he cofounded Cardiovascular Imaging Systems, Inc. Eggers came to the medical devices industry from a different direction, earning an M. He then went to work at Battelle Columbus Laboratories, where he spent a dozen years involved in both the nuclear and medical fields.

When Thapliyal and Eggers began working together their goal was to find a way to use electrosurgical energy to unblock coronary arteries. Hence, the original name of their company was Angiocare. But an accidental discovery changed the direction their start-up company would take.

Typical electrosurgical tools drove energy through tissue, which was then burned away, but Thapliyal and Eggers, working with conductive fluid, became puzzled by the results they were getting. Although tissue was clearly being removed, they could find no evidence of burned edges. After some investigation they realized that the radiofrequency energy they were using had ionized the electrolytes in the conductive fluid, and these ions in turn possessed enough energy to break down the molecules of the soft tissue, essentially dissolving the tissue without generating enough heat to burn surrounding areas.

It was apparent that this phenomenon held great promise, since it offered surgeons greater precision than could be found with traditional electrosurgical instruments, lasers, or even scalpels.

Although the partners were excited by the Coblation technology they had stumbled upon it could be used to clear a clogged artery without causing harm to surrounding tissue they began having second thoughts about trying to enter the highly competitive cardiac product field, requiring a great deal of seed money and years to gain FDA approval. Instead they decided to look for surgical applications in which precision was a major selling point and settled on arthroscopic joint surgery.


Thus when Thapliyal and Eggers incorporated their new company in April they called it ArthroCare Corporation, originally based in Sunnyvale, California. Thapliyal served as the company’s initial president and chief executive officer. In ArthroCare had completed the development of a commercial product using Coblation technology. The company hired a number of doctors as consultants and they began spreading the word throughout the arthroscopy field that an exciting new product was on the horizon.

As a result, when ArthroCare unveiled its first Coblation wands at an arthroscopy trade show in a crowd of surgeons circled the company’s booth. In short order the company had the foundation of a sales and distribution network in place and began selling its product.

The initial marketing approach was simple yet effective: Surgeons were given a chance to use the product for free on surgeries they already had scheduled. Once they tried the wands, they were convinced of the product’s efficacy and asked their hospitals to buy the controlling devices and supply the single-use wands.

Sports medicine was one of the early users of the product, since athletes undergoing arthroscopic surgery could reduce their recovery times and be back in action much quicker and with less pain. In the fall of the company began the process of going public, reincorporating in Delaware, and then in December filing with the Securities and Exchange Commission SEC. Close to controllers were installed and more than 40, disposable wands were shipped.

Already the Coblation device was being used in more than 10 percent of all arthroscopic rotator cuff procedures done on shoulders in the United States.

ArthroCare received a patent on its Coblation technology in Sales continued to mount and new markets were beginning to open up, but to achieve the kind of growth its founders envisioned it was time to bring in a more seasoned executive to take the business to the next stage in its development.

In July Michael A. Baker replaced Thapliyal as president and CEO.

A graduate of West Point with an M. Fourteen months later Thapliyal retired as CTO, turning his attention to other projects. Baker continued the strategy of identifying new medical applications for the Coblation technology, focusing on areas in which precision arthricare at a premium and arthrocaer elimination of collateral damage important.

The company decided to revisit cardiology. About six months after Baker took over, ArthroCare forged a partnership with Boston Arthrrocare to develop a Coblation system suitable for cardiac surgery. Several months later the two partners began to look for ways to apply the technology to ear, nose, and throat surgery. ArthroCare then formed an alliance with medical device arghrocare Inamed Corp. In early ArthroCare received FDA approval for its method of facial resurfacing, that is, wrinkle reducing.

Also inthe company introduced DISC Nucleoplasty to treat herniated back discs by inserting a Coblation arthrocqre into the center of a bulging disc and removing some of the tissue, with the goal of returning the disc to its normal size and reducing the pressure on nerves that often caused patients severe leg pain.

The procedure required local anesthesia only and could be done in less than an hour. Although ArthroCare enjoyed rapid growth during the late s and into the s, it also faced arhhrocare on a myriad of fronts. It had to turn to the court system to protect the patent on its technology. In it sued Ethicon Inc. The two sides settled in July with Ethicon agreeing to license some of ArthroCare’s technology. In the cosmetic surgery field the company faced a market saturated with alternative procedures, leaving little revenue potential despite the effectiveness of ArthroCare’s method.


Millions of people undergo tissue surgery worldwide each year. Our Coblation technology offers an alternative to standard surgical techniques for removing and treating tissue.

Although the company had branched into a variety of fields, arthroscopic surgery continued to supply the bulk of sales. But questions were being raised about ArthroCare possibly inflating its numbers, due to the company’s policy of booking all licensing and royalty fees from multiyear contracts at the time of signing.

As a result, ArthroCare in showed a profit for the first time. The company announced that it would begin to spread out revenues starting with the first quarter ofbut what Forbes called the “day of reckoning” kept getting pushed back later into the year.

The SEC mandated that the accounting change begin no later than the fourth quarter. In ArthroCare received approval to use Coblation technology to remove tonsils, opening up yet another source of revenues.

But the company had now reached a crossroads in its history; management had to determine the best way to take the company to the next level, whether to sell the business to a giant rival or commit the necessary funds to augment the artjrocare infrastructure to support continued growth.

In the end, the decision was to remain independent. Primary reasons for the shortfall was the hiring of a sales force to free the company from its dependence on U. Previously, ArthroCare relied on suppliers who did subassembly in Mexico. In addition, the company vacated its headquarters-manufacturing facility for a new Sunnyvale campus offering 200 as much space. Unfortunately, the transition was costly and took arthrpcare than expected.

ArthroCare System – doc-market

The balance arthroare also was adversely impacted by the unexpected write-off of inventory. ArthroCare continued to build research partnerships with other companies.

ArthroCare also became active on the acquisitions front in the early s. To build on its direct sales efforts in the sports medicine field, it acquired Atlantech Medical Devices, Ltd. In ArthroCare completed a pair of significant acquisitions. In addition, ArthroCare gained the distribution rights to a line of medical screws used in arthroscopy, thus helping the company to round out its product line in the United States.

Because of the addition of Parallax’s technology, ArthroCare launched a concerted effort to market its spine surgery product lines around the world.

Arthrocare System 2000 Timer

Chandler, Michele, “Sunnyvale, Calif. Reeves, Amy, “ArthroCare Corp. The company is founded. The company’s first sales are recorded. Arthrocare completes its initial public offering of stock. Michael Baker is named president and CEO. Other articles you might like: Comment about this article, ask questions, or add new information about this topic: Show my email publicly. Type arthrrocare code shown: Archon Corporation Arthur J.